Much self-congratulation later, Rattner finally gets to the point. Though he believes in the restructured GM and Chrysler, Rattner’s clearly worried that political pressure to get the government out of the car industry as quickly as possible will lead to an unseemly stain on his otherwise spotless record:

as the opportunity to cash out its stake grows nearer, the Treasury should take care to sell wisely. Bringing an end to government ownership of the auto industry is of great importance, but let’s not have a fire sale. We owe that much to taxpayers.

To say nothing of Rattner’s own scandal-torn legacy. Meanwhile, one profitable quarter does not a successful bailout make. Let’s get these IPOs out of the way and take a look at the final bailout bill before we start even joking about the phrase “mission accomplished.”

36 Comments on “Quote Of The Day: Mission Accomplished-ish Edition...”

The only reason GM and C have experienced these improved metrics is because they are still breathing, thanks to the bailout. Nobody disputed that the bailout money would infuse a little life into these companies.

But I still think he’s using fuzzy math re: the $81 billion which is “well on its way to recovery”.

It is interesting how naysayers are moving the goal post. A year ago the story was that “Government Motors” would certainly be a disaster and would still implode and that an IPO for the restructured GM was Not Gonna Happen. Now it is well yeah, maybe it will happen, but the government is still going to book a loss. We shall see how the story continues to unfold.

Blind adherence to “obviously right” ideologies often leads to the wrong conclusions.

The haters complain, but have a short memory. There was NO, ZERO, NADA Chapter 11 financing available to get GM and C over the hump. That means GM and C would have shut down early last year. That also means, GM and C’s dealers would have shut down along with all of the sales and service employees of their dealers and suppliers. It would have been impossible to mothball GM and C for a year and a half and expect to be able to restart it again. And, who knows, if our economy would have rebounded enough with GM and C closed that anybody would have stepped up with financing.

Hat’s off to Bush 43 (the Republican Jimmy Carter) and Obama. You have to give credit to people who were able to unchain themselves from dogma and do the practical thing.

What’s so wrong about believing our country should adhere to its own principles, even when they’re politically and financially inconvenient?

Hint: Capitalism is hard. This is as it should be. Sometimes inferior companies need to die, substandard automakers need to fade away, and workers need to lose their jobs (along with their union-brokered senses of entitlement) by the thousands.

Yes, even if that means that a real, dirty, big-bad Depression takes hold as a consequence. It’s the natural cycle of business, and it’s LONG overdue.

By the way, did you hear how the UAW plans to go after all those concessions it gave up to keep Gov’t Motors and Fiasler around? That sure didn’t take long, did it?

I’m no fan of the UAW, but it’s time for conservative dogma (which I bought into) to be tweaked a little bit. You heard about the fortunes of the Rockefellers, the Gettys, the Vanderbilts, the Carnegies and even Bill Gates and the Waltons. Those people made and sold things. When in the history of man did you ever hear of anybody making obscene fortunes shuffling paper on Wall Street?

The fact of the matter is that the policies of the last 30 years have encouraged that at the expense of hollowing out our industry. Think of it this way, you are taxed at 15% on capital gains and 44% if you work and make a salary (before deductions). Now I’m no liberal by any means, I just believe in protecting what we have, and the auto industry is a strategic asset that needed to be protected.

As an interesting aside, if you watch the last Thursday episode of “After Hours” on autoline.tv, you will see some professor as this weeks guest who is supposedly connected in national security circles. She stated that she wouldn’t be surprised if there weren’t people from the defense department clamoring to save GM and Chrysler for the obvious reasons.

“What’s so wrong about believing our country should adhere to its own principles, even when they’re politically and financially inconvenient?”

Ah, somehow that brings to mind that timeless theme song from All in the Family:

“Boy, the way Glenn Miller played. Songs that made the Hit Parade.

Guys like us, we had it made. Those were the days.

Didn’t need no welfare state. Everybody pulled his weight.

Gee, our old LaSalle ran great. Those were the days.

And you know who you were then. Girls were girls and men were men.

Mister, we could use a man like Herbert Hoover again.

People seemed to be content. Fifty dollars paid the rent.

Freaks were in a circus tent. Those were the days.

Take a little Sunday spin, go to watch the Dodgers win.

Have yourself a dandy day that cost you under a fin.

Hair was short and skirts were long. Kate Smith really sold a song.

I don’t know just what went wrong. Those Were The Days.”

Laissez-faire capitalism fails every time it is tried. The dogmatic notion that unfettered, dog-eat-dog capitalism is a fundamental principle of Americanism is simply incorrect. Believing otherwise requires a very selective view of history.

For example, it wasn’t laissez-faire capitalism which assembled and managed the production side of America’s winning effort in WWII. On the contrary, the government took unprecedented control of all aspects of industry, management and labor during that effort. Would the dogmatists rather have “stayed true to pure capitalist principles” and then have lost WWII? After all, if losing a big war is the price to pay for being “true to our economic principals”, then so be it. Right?

John Horner: Laissez-faire capitalism fails every time it is tried. The dogmatic notion that unfettered, dog-eat-dog capitalism is a fundamental principle of Americanism is simply incorrect. Believing otherwise requires a very selective view of history.

Proof, please. “Bringing about a result I don’t like” is not synonomous with “failure.”

The simple fact is that capitalism in the auto industry was bringing about the proper result – lousy companies were going broke, while the ones that produced superior products (Honda, Toyota) or had taken the necessary steps to save themselves (Ford) were able to survive and were on their way to recovery.

Where I come from, that is called the free market in action. Granted, crybaby executives and coddled union members didn’t like it, but considering that they helped bring about the final result, I say…too bad. Not my problem.

They get standard unemployment compensation benefits, and after that, they can look for new jobs and, one hopes, contemplate the folly of squeezing the golden goose to death.

(I love the nonsensical argument that we must be on the hook for unemployment compensation benefits and welfare for years for these people. Apparently, they and their supporters are unfamiliar with the concept of going out and getting another job after losing one.)

John Horner: For example, it wasn’t laissez-faire capitalism which assembled and managed the production side of America’s winning effort in WWII. On the contrary, the government took unprecedented control of all aspects of industry, management and labor during that effort.

There had to something for the government to control, and it had been built by private industry in the decades prior to World War II. Our industrial sector didn’t spring up overnight after December 7, 1941 by government fiat.

John Horner: Would the dogmatists rather have “stayed true to pure capitalist principles” and then have lost WWII? After all, if losing a big war is the price to pay for being “true to our economic principals”, then so be it. Right?

A red herring argument, and one that displays not only overly rigid adherence to a certain dogma, but also a rather selective interpretation of history.

Please provide the proof that capitalists or anyone else in this country (aside from hardcore pacifists) would have rolled over and played dead in the wake of Pearl Harbor.

After proving proof of that (good luck), please provide proof that none of the industrial facilities used to build tanks, planes, weasels, etc., existed prior to December 7, 1941. Studebaker’s South Bend plant, for example, was a major source of trucks for the Allied effort. The plant dated back to the late 19th century.

It seems to me that the figures being quoted for Treasury’s projected losses on an IPO, ~$25 billion, are close to the amount of cash that GM now has on hand ~$30 billion. I don’t know if this means anything or not. I suppose most of the cash reserves that GM has right now were direct infusions from Treasury.

I’m no financial expert, but agree that the naysayers have at least IN PART been proven a bit too pessimistic about the fact that government intervention CAN have some positive influence on the marketplace.

“Free”, unregulated and unsupported markets get screwed up pretty damn fast as far as I can see due to greed, fraud, incompetence and abuses of the system…sorry, that’s just reality.

And I also notice few people factoring in the costs to U.S. population of letting these companies fail….what is the cost of tens and tens of thousands of unemployed workers collecting unemployment, welfare, food stamps, etc, for months and/or years?…I’d say that would run into a multi-multi-billion dollar cost pretty damn fast, and to boot than we would have virtually NO domestic auto industry…how’s THAT supposed to make us more competitive globally in the long term?

sfdennis1: and to boot than we would have virtually NO domestic auto industry…how’s THAT supposed to make us more competitive globally in the long term?

Last time I checked, Honda, Toyota, Nissan, Hyundai, Mercedes-Benz, BMW and Ford all operated assembly plants within the U.S. Most of them also have design and engineering facilities located here, too. That sounds like a significant domestic automobile industry to me. Please do not conflate “continued operation of GM and Chrysler” with “preserving the domestic auto industry.”

Unless you believe that continued production of the Sebring and Cadillac STS is necessary to show our automaking prowess. If we need to preserve those two clunkers to show our automaking prowess, I’d say, hang it up right now.

Free markets work just fine – if the rule of law is obeyed and corruption is kept in check. But that’s not what we have today. Jefferson (or one of “those guys”) wrote that free enterprise can only work in a moral society. We are closer to Mexico today than what our nation was founded on. It’s an insider/outsider economy, not a free market economy. GM and Chrysler are insiders, during the Clinton administration Microsoft was an outsider. That’s how the game is played today. BP was an insider, not anymore.

Free markets work just fine – if the rule of law is obeyed and corruption is kept in check

If you need to enforce the rule of law and police corruption, you no longer have a “free market”. A free market is just that: free.

It’s also a complete fiction, and it’s proponents are just as delusional as the “We’ve never had real communism!” guys. Actually, they’re more delusional: it’s at least theoretically (if not practically) possible to have real communism; a free market stops being free as soon as one or more members start sabotaging it.

What we’re talking about is the degrees of regulation and intervention that’s acceptable. Which is fine, but not an absolutist position.

Teddy Roosevelt’s battle with the robber barons was not based on ideology but on his moral convictions that a select group of people should not have that much power and be above the law. He didn’t seek to be a “regulator” but a reformer. Today we have the Chicago Way. Take money out of the private sector, provide the people with political theater that you are going up against those big evil corporations while at the same time being in bed with some of them. True morality has given way to political correctness. Other than that there is no right or wrong, only what is legal and illegal. Thus our laws grow ever more complex and the lawyers become a defacto ruling class.

I think the point of the article is fair, and the parallel with “W”‘s “mission accomplished” is perfect.

While it’s not fair to pronounce the bailouts as failures (although I have my doubts about Chrysler), it’s certainly premature to pronounce them as successes, which is what Rattner did.

The only way that the bailouts can be termed “successful” is that they were structured in a way that caused the least harm to one of the Democrats’ big constituencies — the UAW — of all of the other alternatives, which would have been a more radical restructuring of the two companies — probably with the end of Chrysler and a pared-down GM acquiring the Jeep brand and related assets.

One of the “future casualties” of the process that occurred will be either of these companies’ ability to float debt securities. Given that the bondholders were stiffed in the last deal (and were not given the priority in the bankruptcy process that they were legally entitled to), anyone who lends to either of these companies (and perhaps even to Ford) in the future is going to demand a high risk premium (IOW, a higher interest rate) . . . or a government guarantee.

So, the government subsidies will have to continue . . . or the companies will face higher costs than their competitors.

I guess this depends on how you determine the goals of the auto bailout and how you measure success. GM is in pretty good shape now financially and seems to be moving in the right direction with products. They aren’t were they need to be yet, but they aren’t shutting their doors tomorrow.

Chrysler is now with Fiat, and it has been interesting so far. I don’t think Chrysler will be going down soon either.

So the real question is, how do you measure success or failure with the bailouts? Are the companies going to make it 5 more years? My guess is yes, but does that measure success?

That was before Pearl Harbor, not after, so that doesn’t prove that what I posted is incorrect. His two eldest sons – Joseph Kennedy, Jr., and John F. Kennedy (the future president) – both enlisted and saw combat after Pearl Harbor with their father’s blessing.

Before Pearl Harbor a majority of Americans agreed with his stance. They did not want to be involved in a European war. In fact, their arguments sounded very much like the ones used by those opposed to the current Iraq War.

“Laissez-faire capitalism fails every time it is tried. The dogmatic notion that unfettered, dog-eat-dog capitalism is a fundamental principle of Americanism is simply incorrect. Believing otherwise requires a very selective view of history.”

John, we have crony capitalism. Care to wager which one is worse? Crony capitalism has given us most recently the housing crisis and the bailouts (but only if you’re connected to a really big bank or have Fannie or Freddie in your name, the UAW or an automaker – if you’re a small business or Circuit City or Linens n Things or any other non-connected company, no bailout for you). It’s also given us a poorly run FDA, an incredibly outdated air traffic control system due to poor FAA regulations and as well all know, a feckless (lacking feck?) SEC that until recently, had no balls because it was run by former employees of companies that should have been investigated.

Remember the one page request for $750B in bailout money with no accountability? Crony capitalism alive and well.

Crony capitalism takes the worst of us and makes it bigger. It’s a feeding trough for most of our elected officials and their friends. And you appear to be okay with that because it saved GM and Chrysler.

I generally vote Republican, but let’s face facts. Bushie sat on his hands while Enron and the other energy speculators were manipulating energy prices in California. Remember what all the conservative toadies were saying then? They were blaming environmental regulations for making it so difficult to build new power plants. Republicans were screaming about free markets and how we should let them run its course and most people bought it. At the end of the day, they discovered that Enron (and others) were manipulating the system, taking power plants off-line for maintenance during peak periods in order to ratchet up the price.

Bushie also sat on his hands while gasoline shot up to $4.50 a gallon a couple of years ago and that blatant malfeasance, as much as anything else, helped push a weak economy into recession. I believed conservative dogma during the California energy crisis, but as the old saying goes, “Screw me once, it’s your fault. Screw me twice, it’s mine.”

I think the same can also be said about NAFTA, and and the hollowing out of our industrial base. People have to work, they have to earn a living. Not everybody can be a PhD and we have allowed others to be enriched while allowing national assets to get wasted away.

Point is, a lot of people were enriched at the expense of a lot of people who were hurt with your free markets. The same can be said with regards to the privatization of government assets like Fannie and Freddie and strip and flip operations like Cerberus that take over companies and put a lot of people out of work.

Point is, we have evolved from an economy that valued the long term building of a business and careers for employees, to one with a grab your money and run mentality. I don’t think that’s been good for our economy or for the citizens of this country.

Bottom line is, if you can save a few hundred thousand good jobs, and keep these people from being $7 an hour greeters at Walmart, you did a good thing because the past examples I gave didn’t work out very well for the people.

Here in the Columbus area, we have in oligopoly non-profit health system, with four basic providers who work pretty closely together (Ohio Health, Mt. Carmel, Ohio State and Nationwide Children’s).

I was watching a lecture on health care given by the CEO of Ohio Health comparing the cost of health care in various markets. Columbus hospitals deliver above-average care at below average cost. I think he used a metric of approximately $7,000 per patient in this area. He said in Salt Lake City, the number was about $4,200 per patient, which also has primarily a non-profit health system he attributed to a more active lifestyle.*

But here’s the punch line: Do you know where the cost was nearly double what it costs here? Texas, the free market people who gave us Enron, where they have a for-profit health system. The studies they did found that Texas hospitals were more likely to perform more procedures because of the profit incentive.

I think you can analogize this little vignette to what is going on in the larger economy.

That relates more to Texas’s very liberal malpractice laws. In the entire state there are only a couple of pediatricians, the reason…after helping to deliver a baby, they can be sued for any number of reasons for 18 years after that date…little tommy gets into trouble as a teenager with drugs and kills someone, is it the parents fault for never being home? Nope, it’s the pediatrician’s fault because the baby wasn’t delivered fast enough and the juries award the money time and time again. With an environment like that what do you think insurance runs in Texas vs. Ohio?

Not disagreeing with you on the costs, I went back and reviewed the financials from the 70’s forward at my current employer, the amount we used to spend on retirement, we now spend on healthcare and the vice versa, that isn’t good in any way.

boyphenom666: generally vote Republican, but let’s face facts. Bushie sat on his hands while Enron and the other energy speculators were manipulating energy prices in California. Remember what all the conservative toadies were saying then? They were blaming environmental regulations for making it so difficult to build new power plants.

Let’s get our facts straight, first.

California’s electric crisis was brought about by a faulty, halfway attempt at deregulation enacted by California in 1996 – long before Bush was president. The biggest mistake (but not the only one) was that wholesale prices for electricity were deregulated, but RETAIL prices weren’t. Which was a recipe for disaster.

Bush had noting to do with that fiasco – it was California’s fault. Enron attempted to profit from California’s stupidity, but that was not Bush’s fault. That was the fault of a state that attempted to have its cake and eat it, too, when it came to regulating the electric utility industry.

(And let’s shoot down another red herring – Bush did not run Enron, and he had nothing to do with its day-to-day operations. Yes, Enron’s executive leadership supported his run for the presidency. But that doesn’t mean he had anything to do with the company or its collapse. Because if we believe that line of thought, then we can blame Obama for the current Gulf of Mexico oil disaster, because he received lots of contributions from British Petroleum. What’s sauce for the goose…)

Here in Pennsylvania, we have deregulated the electric utility industry, and, surprise, surprise, prices have largely either remained the same or increased only slightly. But Pennsylvania didn’t take California’s approach to deregulating the electric utility industry.

boyphenom666: Republicans were screaming about free markets and how we should let them run its course and most people bought it. At the end of the day, they discovered that Enron (and others) were manipulating the system, taking power plants off-line for maintenance during peak periods in order to ratchet up the price.

That is because the “deregulation” attempt was basically deregulation in name only. The Republicans and libertarians I know pointed out this salient fact. It was the parties responsible for the poorly drafted law in the first place who falsely placed the blame on “deregulation.”

boyphenom666: Bushie also sat on his hands while gasoline shot up to $4.50 a gallon a couple of years ago and that blatant malfeasance, as much as anything else, helped push a weak economy into recession.

The president of the United States does not control the price of gasoline. Nor should he attempt to do so.

Incidentally, we tried that approach in 1971, when President Nixon imposed wage and price controls on the economy. He regulated the price of oil…which exacerbated the effects of the Arab Oil Embargo in late 1973.

If Bush had attempted to keep gasoline at a price that met with your approval, we would have had real shortages of gasoline by 2005.

I also recall hearing during the late 1990s and early 2000s that gasoline was “too cheap” from environmentalists and many on the left. This encouraged people to buy SUVs and drive too much. So when gasoline prices rose, one would think that they would approve.

boyphenom666: I think the same can also be said about NAFTA, and and the hollowing out of our industrial base. People have to work, they have to earn a living. Not everybody can be a PhD and we have allowed others to be enriched while allowing national assets to get wasted away.

Incorrect. The manufacturing sector’s percentage of our total economy has remained remarkably consistent over the years. The number of jobs it takes to make a product has declined, but that is because of productivity improvements, not because of some awful Republican plan to grind the working man and woman to dust, or NAFTA.

If you want manufacturing to thrive in this country, I would suggest that you advocate laws and regulations that don’t make it difficult to construct and operate plants.

The UAW attempted to prevent productivity improvements from happening in the auto industry – first through contract requirements that required companies to replace workers who left, and then with the Jobs Bank. We now know that this approach has failed miserably. That it failed isn’t the fault of the free market. It’s the result of the free market punishing stupid policies and strategies – as it should.

boyphenom666: Point is, a lot of people were enriched at the expense of a lot of people who were hurt with your free markets.

The people who were enriched were the UAW members and executives of Chrysler and GM, and the people who paid are the taxpayers (not to mention the shareholders and employees of companies that were well-managed, as keeping GM and Chrysler around makes it harder for them to compete). They wanted taxpayer money to protect themselves from the completely predictable result of their ineptitude and stubborn attitudes.

The actions that you are applauding did nothing to generate wealth. Those actions merely shifted wealth from productive members of society to entities that were very good at destroying wealth.

Incidentally, free markets do not guarantee success to all participants. The people who got “hurt” in this case brought it upon themselves by sticking to policies (UAW contract) and strategies (betting the farm on light trucks) that hindered the ability of their companies to effectively compete.

boyphenom666: The same can be said with regards to the privatization of government assets like Fannie and Freddie and strip and flip operations like Cerberus that take over companies and put a lot of people out of work.

Freddie and Fannie were only partially privatized, which meant that we got the worst of both worlds. And Cerberus bought a company that was virtually dead. You are applauding an action (the government bailout of Chrysler) that used taxpayer dollars to rescue Cerberus from a bad decision that it made with both eyes wide open.

boyphenom666: Bottom line is, if you can save a few hundred thousand good jobs, and keep these people from being $7 an hour greeters at Walmart, you did a good thing because the past examples I gave didn’t work out very well for the people.

Let’s see – the management and the UAW brought this disaster on themselves (the dealers helped, too), but we need to save them from their own stupidity, shortsightedness and greed, so that we can have a more productive economy where people are focused on the long-term implications of their actions.

Except that, by taking the present course, we rewarded incompetence, provincialism and the attitude that blames everyone else (Toyota, Consumer Reports, environmentalists, free trade, etc.) for his or her problems.

@geeber – The point is still that it’s the government’s job to protect us and it failed. Bush didn’t have a clue and his toadies were blaming environmental regulators for keeping power plants from getting built. Fact remains that a lot of people were enriched and a lot of people suffered and even if the laws were misguided, NO LAWS would have resulted in even worse manipulation.

Considering that it was faulty laws that allowed the manipulation of California’s electric utility industry to happen in the first place, I’m having a hard time believing that no laws would result in even more manipulation.

And the regulation of California’s electric utilities is the responsbility of the California state government, not the federal government. Bush had nothing to do with that fiasco.

I’m not going to argue this point-by-point, but the fact remains that certain people were enriched at our expense. Take the case of gasoline and oil, there was never an actual shortage. In fact, many people were commenting that the Arabs were scratching their heads as to what was causing the high prices. In other words, it’s one thing if we pay through the nose for an actual commodity in tight supply, I understand that. But it’s something completely different when we pay high prices because there is high demand for a security (or futures contract) that bears no relation to the actual product.

The government’s job is to protect us from abuses and from manipulation. It failed. It failed at least twice under Bushie and that doesn’t even consider the war. That’s what makes him the Republican Jimmy Carter.

The oil and gasoline prices were quickly corrected by market forces. Gas isn’t as expensive today as it was a few years ago – despite inflation.

Government policies designed to “protect us” tend to stick around long after the original “crisis” has passed, and cost us more in the long run. If the country had enacted price controls to make sure none of us were being charged too much (however much that is), we’d have experienced a serious shortage of gasoline by now.

I’m glad that Bush didn’t “protect” us from higher gasoline prices, because, over the long run, the cure would have been worse than the disease.

And it was never his responsibility to protect Californians from their own botched attempt at deregulation. That was the responsibility of California’s state government. The last thing I want is a president, regardless of party, who intervenes regularly to protect state residents from bad policies enacted by their own state governments that they initially supported.